Why oh why do we have to put up with Obama instead of the political genius Bill Clinton who trusted Dick Morris to keep his finger on the national pulse and explain how to obtain high approval ratings ? posted by Robert
permalink and comments10:24 PM
He notes that the vast majority of US adults support higher taxes on the rich while elite commentators assert that such a proposal appears to the Democratic base but repels moderates. They are half right, it has 66% support among members of a party's base. That would be the level of support for the Buffet rule among self identified Republicans.
How can people like Brooks and Penn be so totally wrong about something so simple ?
I have my usual comment
This is an excellent and important post. I have long been puzzled by the huge disconnect between public opinion on tax progressivity and elite opinion about public opinion on tax progressivity. As you note, overwhelming enthusiasm for increasing the share of taxes paid by the rich is not new. Gallup has found that majorities over 60% say the rich pay less than their fair share of taxes in every poll on the subject starting in the very early 90s. Yet somehow the elite only just noticed.
The influence of CEOs and other super rich people is clearly part of the explanation. I think it is also true that actual tax proposals involve increasing taxes on the rich but not super rich. Many elite opinion leaders are, by normal peoples' definition rich. But they (or do I mean you ?) don't feel that way.
Also media corporation CEOs are particularly influential. I think this happens even if they try not to influence reporting and commentary.
Here I think a key issue is that it isn't enough for people to carefully prevent their personal self interest from influencing anything they say and write. My idea of what happens is that one person proposes higher taxes on incomes over $250,000 and the listener winces. I am very very acutely aware when a proposal is not welcome, even if the other person is careful to be polite and non-commital.
HerI think it would be useful to ask people about facts in the public record. We can't compare tax rates which people support to the objectively right tax rate. But we can ask people what is the median household income, what is the 95th percentile etc. Then we have the true numbers (they are just statistics). We can actually ask and compare with reality both do that corrected for SMSA specific price levels (it is a hassle but it can be done).
I guess that the elite will guess vastly higher than accurate dollar amounts. As for the correction for prices, I'm dead solid certain that the elite will claim that DC and NYC are vastly more expensive compared to the country as a whole than would anyone who looked at actual prices (including the cost of housing). Of course, price indices are, like optimal tax rates, and unlike household dollar income levels, a matter of constant controversy.
I think that when the elite think of normal typical Americans, they think of a family with an income somewhere from $100,000 to $150,000 per year, that is two to three times the median family income. It would be easy to understand how opinions about opinions are out of touch with reality if opinions about plain facts are out of touch with reality.
Note I use "elite" to refer to power and influence and not to any sort of ability at all (you started it, you mentioned Penn). posted by Robert
permalink and comments2:14 PM
Tuesday, September 27, 2011
Richard Cohen removes all doubt.
His sole aim in life is to make Duncan Black's head explode. Why else would he write of Rich Perry
"So?" Underhill was staring again, somehow fascinated by those gnarled and scarred and strangely able hands. "What, exactly, is rhodomagnetics?" He listened to the old man's careful, deliberate answer, and started his little game again. Most of Aurora's tenants had told some pretty wild tales, but he had never heard anything to top this. "A universal force," the weary, stooped old vagabond said solemnly. "As fundamental as ferromagnetism or grav-itation, though the effects are less obvious. It is keyed to the second triad of the periodic table, rhodium and ru-thenium and palladium, in very much the same way that ferromagnetism is keyed to the first triad, iron and nickel and cobalt."
"A rhodomagnetic component was proved essential to maintain the delicate equilibrium of the nuclear forces. Consequently, rhodomagnetic waves tuned to atomic frequencies may be used to upset that equilibrium and produce nuclear instability.
Cold fusion refers to a proposed nuclear fusion process offered to explain a group of disputed experimental results first reported by electrochemists Martin Fleischmann and Stanley Pons. [skip] The small tabletop experiment involved electrolysis of heavy water on the surface of a palladium (Pd) electrode.
Paladium is the secret.
(OK so "With Folded Hands" was written in 1947 so the idea was that Palladium had something to do with fission not fusion, but that's only off by 2 letters). I had more typos working from memory.
I'm not suggesting that either Asimov or Williamson sold his soul to the devil in order to forecast the news decades later. It's just that many strange things appear in the news (which is massive) and in science fiction. Also, I wish I had had a blog in 1989. posted by Robert
permalink and comments2:43 PM
Points (not in order) 1) On average bankers aren’t as bad as murders (I agree) 2) Not all bankers share any of the blame (I agree) 3) Many borrowers lost their heads as well as their houses (agreed). 4) You can bail out banks with deficit spending (I agree except for the detail that, in the USA, bailing out banks reduced the Federal debt). 5) No true Scotsman admits that there are Scottish bankers (I’m not an expert). 6) Even if property is not theft it should be evenly distributed (I passionately agree). 7) making good policy proposals depend on dubious claims of fact is unwise (I very passionately agree). 8) Bankers do not bear a very large share of the blame for the recession (huhhh wahhhhh ? how can anyone think that. Also what does that have to do with the rest of the post).
Brad DeLong makes a much better argument than the one that came to my mind (see below). His point is that no one made bankers keep mortgage based garbage on their books. Faith in the financial system collapsed when bankers and others discovered that some bankers had done so counter to all sound principles of banking such as originate and distribute, find a greater fool, first you pillage then you burn.
Sure other bankers did all the right things (and neither pillaged nor burned). But if you don’t know who blew over 100% of their equity betting on a bubble, it doesn’t do you any good to know that some bankers didn’t.
This was far far away (Lehman, Bear Sterns) or long long ago (AIGFP which isn’t even a bank) but it happened and many people are paying the price.
My weaker point is that, in the unfortunate paragraph about what happened which mars your nice post on people being mean to you and sound egalitarian political strategy, you assume that house prices are exogenous. A housing bubble just happened for some reason.
Look over the Atlantic again. There was no similar bubble during the 20th century. People will chase trends and inflate bubbles and all that, but something changed sometime around Y2K. I think that banking and finance generally changed. Option ARMS and a housing bubble acting together did not cause Countrywide to abandon all lending standards. They did that because investment banks were willing to buy and package all the garbage mortgages they initiated. OK the blame is shared by rechless homebuyers, non-bank mortgage companies, ratings agencies, AIGFP and some smart hedge fund managers who made money with legal but socially costly tricks (Magnetar). But there have always been reckless homebuyers and they never managed to bring down the US economy. Those of us who aren’t bankers refer to the rest of the lot as “bankers”
Note “the lot” not “you lot” IIRC you were one of the first to warn of the danger back when you worked at the bank of England before you went over to the dark side private sector, where I’m sure you did just as good a job but couldn’t publish your insights. posted by Robert
permalink and comments1:54 PM
Why can't we have a better pres corps part Aleph null
Amy Sullivan correctly notes that silly people have been saying that Obama has a problem with Jewish Americans for 3 years in spite of all of the proof to the contrary.
She also makes a blatantly false, pants on fire, four Pinoccios false assertion on a point of fact.
"...Obama ... when he delivered a speech in May calling on Israel to return to its pre-1967 borders, "
This claim is totally utterly false. Neither in May nor in any other month did Obama call on Israel to return to its pre-1967 borders. The text of his call is not disputed. It is also totally unoriginal. He called on negotiations on mutually agreed changes to the 67 borders. This was also Clinton's position. I think Bush's to, to the extent he pretended to believe in peace talks at all. Anyone who followed the controversy and can remember simple facts for four months knows that Sullivan's claim is false.
The horrible thing is that I am sure she is not lying. I don't know if she fell for easily refuted Republican lies, forgot in four months, or thinks that what Obama actually said is immaterial because in politics perceptions are realities (and heaven forfend that journalists inform the public about the facts when all statements on a subject from one party are false -- that would be unBallanced.
Also, Sullivan's main point is that Jewish Americans don't support politicians entirely based on the degree to which they agree with the Israeli government of the day (or even entirely based on whether they serve the interests of Israel as the Jewish American sees them). Good thing she isn't a protocols of the elders of Zion anti-semite or a neoconservative. But then she assumes the opposite of what she just spent an article proving, saying that Obama will not have a problem with Jewish Americans because he opposes a declaration of Palistinian statehood.
I'd like to see some polling comparing the views of Jewish and Christian Americans on that particular question. More generally, I'd like to know if Jewish or Christian Americans are more likely to agree with, say, AIPAC. I promise you that I don't have a firm prior.
So what the hell is going on ? I'm sure that Sullivan once new that Obama didn't call for Israel to return to its 1967 borders. I'm sure that she knows that Jewish Americans are not all much concerned about Palistinians (and almost none are obsessed by Palestinians). So why does she feel obliged to stick to a narrative which she knows (or knew) is false ?
That is not a rhetorical question and I will try to answer it. I think the key to understanding the nonsense in her post is that both the plainly false claim on a matter of fact in the public record and the conventional but silly speculation about what matters to Jewish Americans are in asides in which she concedes that both sides have a point. The post principally argues that Jewish Americans don't take marching orders from Netanyahu or any Kristol. But to be balanced, she feels the need to concede that the people she criticizes aren't totally 100% completely wrong (I agree that they aren't). I think this means that she does not feel responsible for the concessions. The idea seems to be that if one agrees with her general take, spin, slant and main conclusion then one just can't criticize her.
If I am right, then this is terrible. It means (as we all know) that persistent disciplined liars can get their lies to be treated as facts. If they are careful to avoid saying the truth, then their statements must all be 100% rejected or lies must be partially accepted. So the fact that Obama didn't call for Israel to return to its 1967 borders is less important than the need to agree with Republicans about something. The most frustrating part is that Karl Rove clearly explained his strategy "you don't attach their weaknesses. You attract their strengths" and journalists feel duty bound to make sure that it works.
Note I am not saying that all Republicans lie all the time. I am just saying that some Republicans lie all the time as a matter of principle. If its true, then they don't waste their soundbite and miniquote saying it, because the journalist will say it if they don't. OK I don't have absolute rock solid proof that any Republican other than Karl Rove lies all of the time as a matter of principle, but he is very influential and made his approach very very clear. posted by Robert
permalink and comments9:51 AM
Issues of accuracy, fairness, and integrity come up nearly every time Suskind publishes something. Key sources claim they've been misrepresented and misquoted, that basic facts are wrong,
Then his only criticism of "The Price of Loyalty" is that it is too kind to co-author John O'Neill.
I didn't know that anyone unaffiliated with the Bush administration had such a negative view of Suskind's earlier books. This is a sign of the risk of relying on partisan media. The liberal blogosphere loved them (I'm sure that Jane Hamsher likes the current book -- but I haven't checked). I don't really blame myself. I'm just a citizen, so I don't have to read conservatives, centrists or firebaggers if I don't want to. And I don't.
That said, let's look only at "The Price of Loyalty." O'Neill is a co-author of that book not just a source. The description of O'Neill had to be negotiated by Suskind and O'Neill. And O'Neill had a huge pile of bargaining chips since someone in the Bush administration had responded to his request for information by sending him a huge pile of confidential documents.
update 2: I'm sure you won't read to the end of this diatribe, but you really must read the note after the end of Weisberg's article
Correction, Sept. 22, 2011: Because of a production error, the article originally featured a photograph of former Treasury Secretary Paul O'Neill with a caption identifying him as Ron Suskind.
I'm fairly sure that was a mistake, but my reaction is "Bad production assisting but oh what a critic."
Now consider this extremely dishonest butchered quote from your post "every time Suskind publishes something. Key sources claim they've been misrepresented and misquoted, that basic facts are wrong, " In the case of "The Price of Loyalty" you claim only that one of the co-authors is flattered. Notably all claims that sources were misquoted and/or misrepresented have been proven false. The sources are on disk as quoted in official (but normally secret) records.
I admitted that my quote was totally dishonest. I elided a key word which is absolutely necessary to make your statement true "nearly." But I have to admit that my BS detector is set off by weasel words like "nearly." You didn't have to use it. You could have discussed his sole authored books. You could have noted that "The Price of Loyalty" does not count, because O'Neill had to approve the text,, Suskind had access to usually secret official records and the people he criticized had access to the exact same records.
Any sneaky removal of context in "The Price of Loyalty" would be immediately detected by White House staffers tasked with searching for the quotes in computer readable files and checking the context.
Your view seems to be that "The Price of Loyalty" is an exception to the rule. But you slide over that fact using the weasel word "nearly" and then just not discussing the accuracy of claims of fact in "The price of Loyalty" or the description in it of anyone who isn't a co-author. For a few extra pixels, you could have avoided using a weaselly qualifier and avoided sliding over evidence related to your main claim without mentioning it.
Why didn't you just say that "The Price of Loyalty" is an exception and then provide the very simple explanation of why it is an exception as I did ? It's almost as if you would rather see if you can slip something past your readers.
Later Weisberg lists demonstrable errors of fact in "The Confidence Men." Weisberg's treatment of *his* sources is not reasonable. I have read about many errors on the list in articles which explicitly note that they were noted by the Obama administration. Basically White House staffers seem to have been assigned to look up howlers in the book. Weisberg gives no hint that he didn't discover all of the errors he lists on his own. Now journalism is different from academics, but, where I work, he would be required to cite his sources.
An administration official sent along a partial list under the headline "The Suskind Book Game: 'Too Big to Fact Check?'" From the list of alleged errors: "1.) Suskind wrote that Larry Summers needed Senate confirmation to lead the National Economic Council. 2.) Suskind wrote that Secretary Geithner served as 'Chairman' of the New York Fed. 3.) Suskind wrote that Gene Sperling served as 'an assistant Treasury Secretary.' 4.) Suskind wrote that Geithner had 'never been an undersecretary' at Treasury. 5.) Suskind wrote that the acronym for the Bank for International Settlements is 'BASEL.' 6.) Suskind wrote that Gene Sperling played tennis at the University of Michigan."
Don't Believe Ron Suskind Jacob Weisbert Slate 9/22/11
Suskind has now turned his egregious writing and dubious technique on the Obama administration in his new book, Confidence Men. Once again, his work is strewn with small but telling errors. Here are a few: The Federal Reserve is a board, not a bureau (Page 7); Treasury Secretary Timothy Geithner was previously president, not "chairman," of the New York Fed (Page 56); he was, however, an undersecretary of the treasury, which Suskind makes a point out of saying he wasn't (Page 172); Horatio Alger was an author, not a character (Page 54); Gene Sperling didn't play tennis for the University of Michigan, because he went to the University of Minnesota (Page 215); the gothic spires of Yale Law School, built in 1931, are not "centuries old" (Page 250); Franklin D. Roosevelt did not say of his opponents, "I welcome their hate" (Page 235). What FDR said at Madison Square Garden in 1936, was "I welcome their hatred." That nuance wouldn't matter if it weren't such a famous line, but getting it wrong is the political equivalent of an English professor misquoting Hamlet's soliloquy.
That is an entire paragraph. There is no citation of anything -- no hint that Weisberg had any help from anyone in finding those errors some of which were described in public 3 days before his article was published. And with attribution to the White House. It's easy to look good if you present someone else's work as your own.
Weisberg's post has had a dramatic effect on my opinions both of Ron Suskind and of Jacob Weisberg.
I hasten to add that I am fan of Robert Rubin and a Rubin-hater hater (you don't want to read what I write about Matt Taibbi).
update: I am writing as I am reading. Weisberg is more silly than I imagined possible. Now he is saying that Suskind got claims of fact wrong because of a non denial denial (or maybe two).
Suskind hangs a lot on a line from Larry Summers about the economic team being "home alone." Summers, too, has vehemently disputed Suskind's characterization, telling Politico, "The hearsay attributed to me is a combination of fiction, distortion, and words taken out of context."
Note that Summers's statement is consistent with the statement "I did say '... home alone ...' and that quote was taken out of context. The context was 'A 'quote' B' "(for A and B such that it is obvious that the meaning of the quote was not distorted by removal of context). I mean really when in the history of journalism has the fact that a public figure says he was quoted out of context (without describing the context at all) been considered damaging to a journalist ? I consider Summers' statement to be a confirmation that he did, indeed, say something like that. I am sure that, if hooked up to a lie detecter, Weisberg would say he agrees with me. I am sure he would not stand by his claim about what Summers's said if hooked up to a lie detector. There is no doubt in my mind that Weisberg is being dishonest.
Or to put it another way -- I think Weisberg's post contains an interesting mix of accuracy and originality. And if you know exactly what I mean.
(note also the citation for a fact not in the public record -- cite to prove a claim is true, don't cite if it is clearly true and one might be given credit)
That is a very classic non denial denial. Note that Weisberg asserts that this is a denial of the specific claim that Summers said "
update II The Icing on the Cake. I have now read to the very end (reproduced below)
should no longer be treated as a "controversial" journalist as much as a disreputable one. His fellow journalists no longer trust him. Readers shouldn't either.
Correction, Sept. 22, 2011: Because of a production error, the article originally featured a photograph of former Treasury Secretary Paul O'Neill with a caption identifying him as Ron Suskind.
Why oh why can't we have a better press corps with better production assistants who don't draw attention to a journalist's conflation of two different co-authors posted by Robert
permalink and comments6:46 AM
Tuesday, September 20, 2011
Silly Comments on an Important CNN Poll
This poll shows plurality support for Obama's jobs proposal and majority support for all components of the proposal. The difference is clearly due to large numbers of people who said they didn't have a judgment of the whole proposal, presumably becaue they didn't know what was in it.
Importantly there is strong support for sending money to state governments so long as it is associated with the words "teachers", "first," and "responders" but not "fungible." A 2009 poll showed low support for sending money to state governments when it was associated with the word "deficits" (an irrelevant point on an old forgotten poll, respondents may have thought that running a deficit was a condition for getting ARRA money while the question just observed that states governments had deficits).
One outlier is a bare majority supports "increasing federal aid to unemployed workers." Being insatiable, I assert that the question was miss phrased. "increasing" is ambiguous. Does it mean compared to current policy (99 weeks of UI) or compared to current law (26 weeks of UI after the current temporary bill expires). How is one to answer if one thinks that current policy should continue ? I'm sure that most respondents interpreted the question as more generous than current (temporary emergency) policy. The vague wording might have been chosen to lump together continuation of benefits in weeks 27-99 and hiring subsidies for the long term unemployed. But the effect, I think, is to convince people that the issue under debate is UI for 100 or more weeks.
Also to be really really twitty, the poll asks "How much do you blame the Federal Reserve Bank for economic conditions today." I would answer "not at all, because no such entity exists". I don't blame the Federal Reserve Board much either. This question refers to something which doesn't exist, or ambiguously to one of many Federal Reserve banks. I don't have such a mild view of all employees of the Federal Reserve Banks of Dallas, Minneapolis and, I think, St Louis. I am thinking of the three Presidents (not, pace Ronald Suskind, their chairmen).
I am very sure that fewer people would have blamed the Federal Reserve Board (by the way "Infrastructure Bank" sounds like the worst product name since "Edsel.") posted by Robert
permalink and comments1:50 PM
Monday, September 19, 2011
Comment on, among others, Steve Benen, on David Brooks.
How is David Brooks absurd -- let me count the ways.
Here he slips into assuming that the poor are made poor by their sins. This is a typical conservative assumption and it is demonstrably absurd.
I think his logic is to consider "voters" to be singular -- to be one entity capable of collective sin. "voters" sinned, because some borrowed and some lent recklessly. So the "voters" brought suffering upon itself. This is a typical error of Rousseau, Hegel and Marx and of communists and fascists. Brooks being an intellectual imports it.
But he makes two other absurd claims. First he ignores Congress. It is simply not true that "When you are the president in a financial crisis, you have the power to pave roads and hire teachers." That requires spending money which can only be disbursed as appropriated by Congress. Pretending to cut Obama slack, Brooks has declared him responsible for all of the actions of Republicans in Congress. He doesn't argue that they bear no blame (he can't) so he pretends that they don't exist. This is pure partisan hackery.
He also presents himself as an expert on macroeconomics. He claims, as if it were obvious, that the Federal Government can ameliorate the suffering due to a recession but can't turn the economy around. The data beg to differ. The Federal Government changed a slack economy with high unemployment to a booming economy almost instantly during WWII. It also turned a growing economy into a depressed econonomy in 1937 (and back again in 1938). There is no evidence pre WWII that recessions have a life span -- the probability of a recovery starting in a month did not increase as the recession got older. Since WWII there hasn't been a recession without a policy response, and there hasn't been an effort at stimulus which wasn't quickly followed by a recovery.
Brooks might argue that this is not true when the economy in recession is also in a liquidity trap -- that the effective policy is cutting interest rates which can't be cut any more (and never mind 1933, 1937, 1938 and 1942). But he doesn't. He just assumes that stimulus ameliorates but can't cure.
He also just asserts that cutting taxes and deregulation causes higher growth. There is almost exactly zero evidence that cutting taxes causes higher growth. Deregulation (in large part via bills signed by Bill Clinton) caused the crisis by allowing bankers (and non bank mortgage companies) to sin against the Gods of sound banking.
There are almost no actual economists who agree. Many think that fiscal stimulus doesn't stimulate at all. Others think more can and should be done. Almost none think policy so far was about right (I think Narayana Kocherlakota might be the only one). Notably, Obama doesn't claim that the Federal Government has done all it can. He rejected Brooks' defence of himandCongress and proposed the jobs act.
Frankly the only explanation of the column is that Brooks is trying to make Krugman's head explode. posted by Robert
permalink and comments1:21 AM
Tuesday, September 13, 2011
Congressional Republicans are worse than Jacob Weisberg imagines possible even when he takes into account the fact that they are worse than he imagines possible.
Opinions on whether tax cuts are stimulus spending differ. Jacob Weisberg does not have a point.
Weisberg wrote a generally good article "Republicans Vs Economics" but he made one gross blatant error, obviously when he tried to argue that not all powerful Republicans are know nothings, cynics or both.
That's not to say that everyone who rejects Obama's stimulus spending is a default-welcoming ignoramus. Libertarians or libertarian-leaners don't necessarily think stimulus won't grow the economy; they just worry that it will grow the government at the same time and that it won't ever shrink back. But they don't mind stimulus tax cuts, which reduce the resources available to government. Rep. Paul Ryan, for instance, the government-slashing chairman of the House budget committee, has argued that stimulus spending is an evanescent sugar high that produces no lasting economic benefit.
His standard was support for tax cuts as stimulus. His example was Paul Ryan. He argued that Ryan called "stimulus spending" sugar high economics. He should have checked. In fact, Ryan called using tax cuts as stimulus sugar high economics
“I’m not a Keynesian, so I don’t think sugar-high economics works,” the Wisconsin Republicans said at a policy discussion hosted by The Hill and sponsored by No American Debt, an advocacy group. “We’ve sort of proven this already, a number of times. Temporary tax rebates don’t work to create economic growth ..."
By Weisberg's chosen standard, the Congressional Republican who he claims is neither a cynic nor a know-nothing is one or the other (or both).
When will reporters learn that they sometimes have to choose between admitting that both sides don't have a point and making fools of themselves ?
Now I'm sure Weisberg would find this post puzzling. If I am not satisfied by an article entitled "Republicans Vs Economics" which asserts that many top Republicans want to hurt the country (in the short run) what would satisfy me ?
Simple, a journalist who does not assert that temporary extension of the payroll tax holiday is a spending increase not a tax cut. That is, a journalist who checks a source before paraphrasing from memory (or desperation for Ballance given the gross liberal bias of the facts). posted by Robert
permalink and comments8:12 AM
Sunday, September 11, 2011
From the Washington Post
Obama scores well against terrorism
Peter Wallsten National security has gone from being Obama’s big weakness to his area of policy strength, polls find.
I note that evidence has some effect on public opinion . I also note that the President gets the credit and the blame (the buck stops there). Obama didn't get distracted by a desire to invade a country his father neglected to conquer, but I don't think he did anything special and good.
But what strikes me is that the www.washingtonpost.com headline and abstract guy (or gal or team) has officially decided that the facts don't matter -- that they report only opinions and not facts. The word "polls" is tacked on second to last. The distinction between what is true and what a majority of US adults think is not consider worthy of large type. "policy strength" means "publicly perceived policy strength." The distinction between perceptions and objective reality was ignored.
Somehow the rule that newspapers should report facts not opinions has lead to them reporting opinions not facts -- a discussion of the facts is perceived as expressing the reporter's (or editor's) opinions. Since everything is debated, every claim is an opinion. Of course, I'm just following Colbert and noting that the facts have a clear liberal bias.
In contrast, it is OK to report the fact that most respondents in a poll believe p or the fact that the inside the beltway conventional wisdom is q. But widely shared opinions are the most dangerous opinions. An eccentric error leads to debate, a shared error leads to ... well invading Iraq and austerity in a liquidity trap and all sorts of stuff.
This can have dramatic effects. Newspapers do not regularly report that views on the shape of the Federal budget differ and that the US public is totally wrong. The idea that huge amounts of money is spent on foreign aid with limited results can't be contested by noting that the amount of money spent is one fortieth the average guess by an US adult, because that simple fact published in the Federal Record has a liberal bias. posted by Robert
permalink and comments4:35 PM
Saturday, September 03, 2011
I think Matt Yglesias has gone completely around the bend and said it is the Fed's fault that we can't have nice things and clean air.
I don’t have any defense to offer of yesterday’s decision by President Obama to evade implementation of EPA recommended ozone regulations, ...
You don’t have to like it, but you do have to understand that it’s the case. As a matter of practical politics, to make progress on the environment you need healthy macroeconomic conditions. Which is part of my case for why everyone on the left needs to care more about monetary policy. ... And precisely because it’s not true that environmental regulations are job killers, environmentalists need to care about the Federal Reserve.
This is my comment on his blog.
I have been apologizing for my repeated nearly identical criticisms of your posts on monetary policy, but your obsession with monetary policy is reaching extremes that would make Milton Friedman blush.
First note that the current monetary policy is by far the most radically dedication to expansion of any monetary policy at least since the Fed was founded. All earlier efforts to pump up the economy are dwarfed by the Fed's current (ongoing) efforts.
Second note that you simply assume that the Fed can deliver full employment. You don't even bother to argue this. OK fine I'm sure you understand economics much better than Keynes (what the hell did he know anyway) and I understand that anyone who advocates even more expansionary monetary policy must agree with your definite undeniable assertion made right in this post) that it will solve all of our problems *especially* if they have specifically written otherwise.
But third you do understand that the leader of our particular coalition (let alone the leader whomever it might be of the other one) can't "put in place a Fed team". He can nominate people who will never work for the Fed, because the confirmation vote will be filibustered.
Consider the case of Peter Diamond.
Oh by the way, you noted that it was very brave and a bit reckless to argue that a Nobel Memorial prize winner is wrong. But now you are just assuming that he is wrong. You don't even bother to argue. Your position is that if full employment would be good, it is Obama's fault that he didn't nominate two more people to the Fed so that the Senate not approving them would cause full employment.
Do you even understand how absurd the argument in this post is ?
Oh something else. There is still overwhelming popular support for environmental protection. The argument that the people won't support tougher smog standards because of the unemployment rate is unsupported by any evidence on public opinion. In contrast you assume that at the NAIRU people understand that employment does not depend on anti-pollution (or fiscal or trade) policy. Obviously the argument that this is bad because it will cost jobs was made when the unemployment rate was 5%. Your argument is based entirely on the assumption that the US voting public shares your views on macroeconomics. They don't (the most popular proposal for what to do to help the economy was "cut government spending).
Finally note that Paul Krugman argues, convincingly, that this is a very good time to force firms to spend on anti pollution technology because we are in a liquidity trap. His argument makes sense. If firms aren't hiring because they don't have customers (check) making them spend more for the same output makes them spend more (output limited by demand) so increases aggregate demand and employment. In general anti-pollution efforts should reduce real wages (if the cost of clean air is not counted in the CPI bundle -- it increases correctly measured real wages) but not affect unemployment. Right now, it will cause higher employment. Now you might argue that the public doesn't believe Krugman, but the public doesn't believe you that, if the Fed achieves its stated aims, then pollution regulations don't reduce jobs (lump of labor fallacy wins the day) *and* the public supports tighter regulation of pollution.
OK a challenge. Find economists who are prominent in the profession who agree with you that the problem (ozone or unemployment directly) is due to the Fed. Many will criticize the Fed but, I think, none will say that the Fed could make things fine. To be clear, Scott Sumner is not a prominent economist (he's a well known blogger but not prominent in the field). Joe Gagnon is not prominent except that he got a lot of attention with, well exactly the argument you are making.
There is this stupid but on the web ranking of economists.
Gagnon is ranked number 1279
I am ranked 1348 (have you ever heard of me except in your comments thread and at Brad DeLong's blog ?
Peter Diamond is ranked 63 (he's the one with whom you chose to argue about what the Fed can achieve).
Scott Sumner is not ranked in the top 5% of economists. I can't find him in the top 10% either. His works convince me that this is *the* Scott Sumner
beyond my comment.
I add that it if isn't unemployment, it is inflation. First it isn't known that looser monetary policy reduces the long run average rate of unemployment. Second, it does cause higher inflation. I don't see the problem with higher inflation, but people hate it. The argument that pollution controls add to inflation is just as convincing to the public as the argument that they cost jobs. Also it is true, but I won't stress that point, because the debate is about politics.
I have been looking at Pollingreport. I don't have anything particular to add but I note two things
First there are a lot of questions where the pollster asserts that anti pollution regulation hurts the economy. I can see that if the question is phrased economy vs environment that the economy would get more support when we are in a recession. But that doesn't mean that Republicans can convince people to accept that framing (pollsters can when polling but look at the record of political consultants who talk about framing).
Second I don't see a pattern in simple questions for tighter or looser environmental regulation (except that there is always a majority for tighter regulation). But I wouldn't as I didn't find a long time series. The very recent numbers look normal to me.
Third, there clearly has been an increase in global warming skepticism. I think this is a Fox News and partisan Republicans issue. The Republicans used to accept the fact of global warming. Now Republican leaders don't. The lemmings follow. I see no role for the economy. In particular the public is totally wrong about whether most scientists agree on global warming but this has nothing to do with smog *or* with polls of public opinion on smog.
Finally, Yglesias seems to me to be generally not only very smart but also very reasonable and reality based. I just don't know what it is with him and the Fed. I dunno maybe the Fed was rude to him or something.
The Fannie/Freddie took over agency (FHFA, that is, DeMarco) is going to sue major banks for fraud. The claim is that employees of the major banks lied about the mortgages underlying securities sold to Fannie or Freddie. No one seems willing to claim that this fraud did not occur. Also, the banks were saved by Federal intervention. Also the bankers are paying each other huge bonuses. Finally the banks have huge piles of cash which they aren't lending. It might seem hard to argue that the suit is a bad idea.
But where there's a will there's a way. For Ballance, Brady Dennis, Steven Mufson and Zachary A. Goldfarb present the case for letting banks keep money which, by law, belongs to the Federal Government.
Argument 1) what is good for the banks is good for us
Some financial analysts said the lawsuits come at a particularly bad time because bank lending is already sluggish. They warned that the lawsuits could sap capital from banks, leaving them with even less money to lend, and further weaken the economy.
Some financial analysts need to be told about supply and demand. Low volume can be a sign of low supply of loans with many liquidity constrained agents eager to borrow but with banks afraid to lend because they don't have capital or reserves or something. This isn't the current problem. Banks and other firms have huge amounts of money sitting around. Did you notice the interest rates on Treasuries ? There is low volume of lending because firms have excess capacity and don't want to invest, many consumers are not credit worthy no matter how much money one has sitting around (zero real return is better than loaning to someone with an underwater mortgage) and solvent consumers are not inclined to ramp up consumption much (consumption is like that).
These "financial analysts" are not reasonable independent economists (more on that below).
Argument 2) I will just quote "Others argued that Fannie and Freddie were sophisticated investors who helped shape the very securities they purchased." What ?!? if Fannie and Freddie issued the securities, why did they purchase them. The whole point of hte law suit is that not all mortgages are equal (and the ones the banks sold to Fannie or Freddie are not like the ones the banks said they were selling). Argument 2 is based on the assumption that all mortgage backed securities are the same, not similar, the same (the *very* securities). This is pathetically grossly false. Sure Fannie and Freddie issued a lot of mortgage backed securities. The Fed bough over $ T worth of them. The Fed has been making huge mega gigantic profits.
Everyone knows that different mortgages have different risk of delinquency. For some reason Brady Dennis, Steven Mufson and Zachary A. Goldfarb feel the need to pretend to take seriously someone who claims that all mortgages are the same. I'm sure they aren't stupid. I'm sure that they feel that to be responsible journalists, they have to quote an obvious lie without noting that it is a lie (actually, as far as I can tell, adding the "very" which makes the claim totally false as opposed to merely deceptive). Why do they feel they have to do that ?
OK sourcing. Who are these "financial analysts" ? Who said that Fannie and Freddie issued the securities they bought ? How about some names. How about one name ?
One former top executive at a financial institution that bought and sold mortgage securities, and who spoke on the condition of anonymity, criticized the suits, saying that “the whole thing has gotten ridiculous and out of hand. The banks are big boys. Fannie Mae and Freddie Mac are big boys. The people who invested in private securities are big boys.”
Uh doesn't the Washington Post have a policy on granting anonymity ? For one thing aren't they supposed to explain why they granted it ? What is the explanation ? A former top executive is afraid he might be fired by his former employer if he said that it shouldn't be forced to pay lots of money to the Federal Government ? The source demanded anonymity, because he is ashamed of the nonsense he is spouting. Why aren't the Post's intrepid reporters ashamed to quote him (or, hah sure, her) ? Why did an editor allow anonymity ?
Then "Added another bank official: “These are folks that were involved in creating these securities. The idea that Fannie and Freddie were victims in this, it defies credibility.”" More anonymity ! Also a lie. The claim would be true if "these securities" were replaced with "securities of this general type." The whole argument of the plaintiff is that securities of this general type are fundamentally different. The anonymous quote is a material lie.
No one is quoted by name in the article arguing against the suit. Note there is no hint in the entire article about who the "financial analysts" who think the suit will hurt the economy might be. The assertion is supported by no evidence at all -- not even a source who was granted anonymity counter to Washington Post policy. I assume someone made that argument (I am not accusing Brady Dennis, Steven Mufson and Zachary A. Goldfarb of journalistic fraud). However, I suspect that the analysts are (or were previously) employed by big banks. The only anonymous sources quoted arguing against the suit (for other nonsense reasons) have a clear conflict of interest.
By the way, the article goes on to note that the securies in question were not assembled by Fannie or Freddie. This is obvious, but Brady Dennis, Steven Mufson and Zachary A. Goldfarb should have noted that the facts they describe contradict the assertion made by one of their two anonymous sources.
The part I find most frustrating is that I'm sure Brady Dennis, Steven Mufson and Zachary A. Goldfarb consider the article a no holds barred call em as they see em (various other sports metaphor) description of what crooks the bankers were. But for some reason, they feel obliged to quote BS and lies (respectively) from two people ashamed to let people know their names.
Couldn't they just write "we could find no one willing to be quoted by name defending the banks." ? That appears to be the case. It is news. Why not report it ?
The political struggle here will be between Obama's desire to present these measures as separate ideas, against the Republican desire to lump them together under the rubric of "stimulus." The endgame will involve a debate over the Republican Party's decision to block Obama's plan. How that plan is defined -- middle class tax cuts, infrastructure, re-training, or simply "stimulus" -- will determine who wins that debate.
I agree, so I think a better speech would propose middle class tax cuts, more middle class cuts and still more middle class tax cuts (plus maybe tax increases for rich people). To be clear not just the whimpy little payroll tax holiday extension but also bringing back the $800 a family Obama tax cut and uh something else. But all taxes so it is simple enough for people to understand. posted by Robert
permalink and comments5:44 AM
Friday, September 02, 2011
Josh Marshall has a very good (as usual) post on the terrible employment numbers and Obama's big job speech.
He notes "The limitation on the president's plan should be the reality of anti-government turn of public opinion not the prospect of willing cooperation from his Republican foes." I have been arguing this for months (Krugman say does not seem to accept the limit due to the extreme unpopularity of further stimulus).
The same point was made by Jon Chait and a similar point (with bonus hack gap) by Matt Yglesias. It seems everyone knows.
I do find two words in Marshall's post a bit odd "small" and "bore" with context
" small bore jobs initiatives (payroll tax holiday, etc.)"
A payroll tax holiday is an inefficient stimulus with small employment bang for the deficit buck. However, it does not have to be small bore. A complete payroll tax holiday -- no tax not for employers either -- would be a mega gigantic bore initiative.
The initiative which Obama has proposed again and again is, indeed, small bore -- a 2% of payroll reduction of the payroll tax. but it is small bore because that was what the Republicans would accept in exchange for extension of Bush tax cuts on family income over $250,000. Some how extending the plainly insufficient holiday has become the upper limit of conceivable temporary payroll tax cuts. How did that happen ?
Similarly, it is agreed by all people who have run the numbers that the medium term budget deficit can't be handled by raising taxes on the rich. It is noted that this is one fourth the size of budget changes needed to stabilize the debt to GDP ratio. Wait how did I get a number (one fourth) out of a sign (raising). Well it is just agreed that the highest conceivable tax rates on the rich are the Clinton rates -- that the biggest possible tax increase is to allow Bush tax cuts to expire.
Now note that we are not talking about proposals that might be approved by Congress. So why not a large bore tax cut for the non rich combined with a large increase in taxes on the rich (to reduce the increase in the deficit without damaging the recovery since the marginal propensity to consume of the rich is tiny) ?
OK seriously people don't care much about the deficit, so the maybe just going up to Clinton rates for the rich would be the best political theater (say the increase is permanent so the 10 year deficit would decrease yada yada).
Somehow limits due to Congress are allowed to limit political theater too. Why ?